Investments and fair value measurements

3 Months Ended

Mar. 31, 2024

4. Investments and fair value measurements

The Company’s assets and liabilities that are measured at fair value on a recurring or nonrecurring basis within the fair value hierarchy are as follows (in thousands):


As of March 31, 2024	Level 1		Level 2		Level 3
Current assets:
Cash equivalents:
Money market funds	$	217,979	$	—	$	—

Marketable securities:
U.S. government securities	$	—	$	173,883	$	—

Non-current assets:
Strategic investments	$	—	$	—	$	10,311

Non-current liabilities:
Cash settled stock appreciation rights	$	—	$	—	$	22


As of December 31, 2023	Level 1		Level 2		Level 3
Current assets:
Cash equivalents:
Money market funds	$	266,692	$	—	$	—

Marketable securities:
U.S. government securities	$	—	$	171,372	$	—

Non-current assets:
Strategic investments	$	—	$	—	$	10,311

Non-current liabilities:
Cash settled stock appreciation rights	$	—	$	—	$	48

The Company’s money market funds are classified within Level 1 of the fair value hierarchy because they are valued using quoted prices in active markets. The Company’s investments in U.S. government securities are classified within Level 2 of the fair value hierarchy because they have been valued using inputs other than quoted prices in active markets that are directly or indirectly observable. The Company’s strategic investment is classified within Level 3 of the fair value hierarchy because it has been valued using significant unobservable inputs for which the Company has been required to develop its own assumptions.

The changes in the fair value of Level 3 financial instruments, of which remeasurement of SARs and impairment of strategic investments are recognized in the consolidated statements of operations, was immaterial for the three months ended March 31, 2024.

The Company evaluates its strategic investments for impairment at each reporting period. This evaluation consists of several potential qualitative and quantitative impairment indicators including, but not limited to, the investee's financial metrics, whether there were any significant adverse changes in the economic environment or general market conditions of the geographies and industries in which the investee operates, and any other publicly available information that may affect the value of the investment. No impairment losses were recorded in the three months ended March 31, 2024 or 2023.

The difference between the strategic investment’s cost basis of $15.0 million and the carrying value of $10.3 million is due to cumulative impairment charges of $4.7 million, of which $1.8 million was recorded during the second quarter of 2023, and $2.9 million was recorded during the third quarter of 2022.

- Definition

The entire disclosure for the fair value of financial instruments (as defined), including financial assets and financial liabilities (collectively, as defined), and the measurements of those instruments as well as disclosures related to the fair value of non-financial assets and liabilities. Such disclosures about the financial instruments, assets, and liabilities would include: (1) the fair value of the required items together with their carrying amounts (as appropriate); (2) for items for which it is not practicable to estimate fair value, disclosure would include: (a) information pertinent to estimating fair value (including, carrying amount, effective interest rate, and maturity, and (b) the reasons why it is not practicable to estimate fair value; (3) significant concentrations of credit risk including: (a) information about the activity, region, or economic characteristics identifying a concentration, (b) the maximum amount of loss the entity is exposed to based on the gross fair value of the related item, (c) policy for requiring collateral or other security and information as to accessing such collateral or security, and (d) the nature and brief description of such collateral or security; (4) quantitative information about market risks and how such risks are managed; (5) for items measured on both a recurring and nonrecurring basis information regarding the inputs used to develop the fair value measurement; and (6) for items presented in the financial statement for which fair value measurement is elected: (a) information necessary to understand the reasons for the election, (b) discussion of the effect of fair value changes on earnings, (c) a description of [similar groups] items for which the election is made and the relation thereof to the balance sheet, the aggregate carrying value of items included in the balance sheet that are not eligible for the election; (7) all other required (as defined) and desired information.

+ References + Details